Association between the Value-Based Purchasing pay for performance program and patient mortality in US hospitals: observational study

Healthcare systems around the world are striving to deliver high quality care while controlling costs. One compelling strategy is the use of financial incentives to reward high value care. The US federal government has made substantial efforts to shift towards value based payments since the passage of the Affordable Care Act in 2010. One key program is Hospital Value-Based Purchasing (HVBP) introduced by the Centers for Medicare and Medicaid Services (CMS) in 2011. HVBP rewards or penalizes hospitals based on their performance on multiple domains of care, including clinical processes, clinical outcomes (eg, 30 day mortality for acute myocardial infarction, pneumonia, and heart failure), patient experience, and, more recently, cost efficiency. Funding for HVBP is designed to be budget neutral; Medicare withholds a percentage of inpatient payments to prospectively paid hospitals and then redistributes this money back to hospitals based on their performance. In fiscal year 2015, HVBP led to penalties for 1360 hospitals and bonus payments to 1700 hospitals.
From the Discussion

Three years after the introduction of the US national pay for performance program — Hospital Value-Based Purchasing (HVBP) — we find no evidence that it has led to better patient outcomes. The trends in mortality for the target conditions among hospitals participating in HVBP actually slowed after the program’s introduction, although that slowing was also seen among hospitals not participating in the program. Even among hospitals with worst patient mortality at baseline, a group of hospitals that had arguably more motivation to improve to avoid penalties, we found no evidence that HVBP drove improvement beyond secular trends observed in a matched group of non-HVBP hospitals. Taken together, these findings call into question the effectiveness of the national hospital pay for performance program and whether it is having the desired effect on patient outcomes.

This study has important implications for international efforts using financial incentives to drive improvements in hospital quality of care. The program on which HVBP was based, the US Premier Hospital Quality Incentive Demonstration, also failed to improve patient outcomes. Some critics argued that prior pay for performance programs based purely on attainment did not motivate poor performers to improve (since they were unlikely to improve enough to earn bonuses) and also did little for higher performers who would have received bonuses even by maintaining their status. However, HVBP was modified to include financial incentives for both achievement and improvement to ensure that all hospitals had some motivation to improve. Further, as a national non-voluntary program, HVBP was posited to be more impactful because it was not focused on a voluntary group of hospitals that might have been high performers at baseline. Despite these advantages, we found no evidence that HVBP improved patient outcomes. Given the amount of time and resources spent in its design and implementation, these findings are discouraging and should motivate policymakers to consider changes in the structure and size of incentives in ways that may lead to meaningful improvements in patient care versus completely rethinking the utility of pay for performance programs that target hospital quality.

Comparison with other studies

These results add to a growing body of literature that suggest many pay for performance programs are largely ineffective in improving patient outcomes. As further emphasis on value-based programs continues to grow, healthcare policymakers should carefully consider the costs of investing in these pay for performance programs and the potential unintended consequences. Ultimately, these programs need to be evaluated based on weighting the benefits and harms they create — and our work suggests that the benefits seem to be small, if present at all.

Pay for performance programs add to the administrative burden of our health care system and contribute to physician burnout, and now we have yet one more study that shows that they are ineffective in improving patient outcomes.

The thrust of health care reform is currently directed towards paying for quality instead of quantity, with an emphasis on measurement and process, resulting in greater administrative waste. Current cost containment has been largely confined to cost sharing which erects financial barriers to beneficial care and can only result in worse outcomes.

Now people are talking about what we really do need instead – a well designed single payer system, an improved Medicare for all – but the legislators, public administrators, and stakeholders are ignoring the conversation. This should be a call for organized protests. Why aren’t they happening?

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Physicians for a National Health Program's blog serves to facilitate communication among physicians and the public. The views presented on this blog are those of the individual authors and do not necessarily represent the views of PNHP.